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Research & Forecast Report

New Developments > Entitled developments prove to be more appealing than ever

> Limited supply mixed with high demand poses a challenge

At the end of 2016, San Mateo County showed no signs of easing up. The trend this quarter revolved around new developments coming to market. Demand continues to remain high as more of the office space in the Peninsula was pre-leased before completion. However, this past quarter, the R&D market jumped on the bandwagon with a notable pre-lease of an entire building at The Cove in Oyster Point in South San Francisco. As for the industrial market, their supply continues to be limited while their demand is great, leaving a competitive market with increasing asking rates and low vacancy rates.

The economy for San Mateo County is not letting up either. The unemployment rate for San Mateo County continues to be the lowest in the state coming in at 2.80 percent compared to California’s rate of 5.00 percent, according to the State of California Employment Development Department. San Mateo County remains one of the most popular markets due to the constant need for premier commercial real estate.

SAN FRANCISCO PENINSULAQ4 2016

Summary Statistics Q4 2016 All Products

Previous Quarter

Current Quarter

Overall Vacancy Rate 4.11% 4.06%Net Absorption (448,659) (284,418)Construction Completed (SF) 0 687,303Under Construction (SF) 1,993,836 1,306,533Office Asking Rents (FS)* $5.13 $5.20R&D Asking Rents (NNN)* $2.90 $3.11Industrial Asking Rents (NNN)* $1.12 $1.25*Asking Rents Reported Monthly

Economic Indicators Previous Quarter

Current Quarter

U.S. Unemployment Rate 4.90% 4.60%Labor Force Participation 62.80% 62.70%Interest Rate - 10 Year Treasury 1.69% 2.46%

Consumer Price Index 2.40% 2.42%

Consumer Confidence 91.20% 98.20%

Business Confidence 51.50% 54.70% *Source: tradingeconomics.com/united-states/indicators

Direct Vacancy vs. Sublease Vacancy RatesSan Mateo County | All Products

Overall vacancy rate decreased 5 basis points from 4.11 percent last quarter to 4.06 percent. Direct vacancy decreased 15 basis points and sublease vacancy increased by 10 basis points since last quarter.

Market TrendsRelative to prior period | All Products Q4 2016 Q1 2017*

Vacancy

Net Absorption

Under Construction

Office Rental Rate

R&D Rental Rate

Industrial/Warehouse Rental Rate

*Projected

San Mateo County

455,200

Labor Force Unemployment Rate

2.80%

Number of Employed

87,601

*Source: labormarketinfo.edd.ca.gov/data/top-statistics.html

442,300

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

0%

1%

2%

3%

4%

5%

6%

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Subl

ease

Vac

ancy

Rat

e

Dire

ct V

acan

cy R

ate

Direct Vacancy Rate Sublease Vacancy Rate

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2 San Francisco Peninsula Research & Forecast Report | Q4 2016 | Colliers International

Office > Average asking rates are still climbing

> Significant lease activity surrounding new construction

The office sector on the Greater San Francisco Peninsula (includes San Mateo County, Palo Alto, Mountain View, and Los Altos) closed the year with an exceptionally low 5.90 percent vacancy rate, which is a slight change from last quarter's rate of 5.93 percent. San Mateo County ended 2016 with a vacancy rate of 6.97 percent, a slight tick up from last quarter’s rate of 6.77 percent. Lease rates continue to inch upwards with the average asking rate for office space on the Greater San Francisco Peninsula currently at $5.49 per square foot fully serviced. This rate increase is a dramatic rise from the $4.78 fully serviced rate at the close of 2015. The average asking rate for San Mateo County alone is currently $5.20 per square foot fully serviced compared to $4.52 this time last year.

Gross absorption, a measure of all leasing activity in a market area, for San Mateo County dropped significantly in 2016, perhaps partially explained by the timing of the many in-progress developments in the region. The 2,485,098 square feet of gross absorption for 2016 is roughly half of last year’s very strong total of 4,142,154 square feet. It is worthy to note that San Mateo County’s gross absorption total of 627,885 square feet this quarter compared to 1,540,947 square feet from the fourth quarter of 2015 does not include many of the largest leases done at buildings currently under construction.

New construction on freshly entitled product is ubiquitous on the Peninsula, and large users flocking to these projects were a significant part of the leasing activity this quarter. OpenText’s 108,015 square foot lease at Wilson Meany’s Bay Meadows project in San Mateo and Stanford University’s 46,420 square foot expansion at 225 California Avenue in Burlingame are both examples of prominent users flocking to new transit-facing developments. Another significant transaction this quarter includes Achaogen’s 47,118 square foot South San Francisco lease.

Vacancy rates have clearly leveled off and some of the highest priced markets seem to be experiencing some modest pricing pressure. Despite that, there appears to be solid support in the broad market and the Greater San Francisco Peninsula seems well-positioned to weather any volatility in 2017.

16.04%

12.16%

23.64% 16.89%

16.75%

14.53% ≤ 3K SF

3-5K SF

5-10K SF

10-20K SF

20-50K SF

≥ 50K SF

Source: CornerstoneEarth.com

225 California Avenue

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

0%

5%

10%

15%

20%

25%

Q4 2007

Q4 2008

Q4 2009

Q4 2010

Q4 2011

Q4 2012

Q4 2013

Q4 2014

Q4 2015

Q4 2016

Total Vacancy Rate Average Asking Rate (FS)

San Mateo County Office Rent vs. Vacancy

Source: Colliers International Redwood City

San Mateo County Office Gross Absorption by Size Range


San Mateo County Office Net Absorption vs. Gross Absorption


(1,000,000)

(500,000)

0

500,000

1,000,000

1,500,000

2,000,000

Q4 2007

Q4 2008

Q4 2009

Q4 2010

Q4 2011

Q4 2012

Q4 2013

Q4 2014

Q4 2015

Q4 2016

Gross Absorption Net Absorption

15.79%

12.16%

16.88%

25.52%

31.67% ≤ 3K SF

3-5K SF

5-10K SF

10-20K SF

20-50K SF

≥ 50K SF

3

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

0%

5%

10%

15%

20%

25%

Q4 2007

Q4 2008

Q4 2009

Q4 2010

Q4 2011

Q4 2012

Q4 2013

Q4 2014

Q4 2015

Q4 2016

Total Vacancy Rate Average Asking Rate (FS)

(400,000)

(300,000)

(200,000)

(100,000)

0

100,000

200,000

300,000

400,000

500,000

600,000

Q4 2007

Q4 2008

Q4 2009

Q4 2010

Q4 2011

Q4 2012

Q4 2013

Q4 2014

Q4 2015

Q4 2016



R&D > New developments on the rise for R&D and the biotech industry

> The average asking rate dramatically increased to $3.11 NNN

The research and development sector and the biotech industry on the San Francisco Peninsula is the hottest it has ever been. Deal volume and new construction remain incredibly strong with demand at an all-time high. Expect the building base for this product to continue to expand with elevated rents and low vacancy.

The average asking rent this quarter shot up to $3.11 NNN, which was a 7.20 percent increase from $2.90 NNN last quarter and a record high for research and development rents for San Mateo County. As far as vacancy goes, the vacancy rate dipped just below 2.00 percent coming in at 1.96 percent, which is down 64 basis points from last quarter’s 2.60 percent vacancy rate. Gross absorption was also very strong this quarter with 417,592 square feet of new leases bringing the year-to-date total to 888,751 square feet of new user activity for research and development. Deal volume came in strong this quarter with a very impressive total of 29 deals compared to only 8 deals completed last quarter and 70 deals completed in all of 2016.

South San Francisco, in particular, has seen the most development and will continue to see new product over the coming years. Currently there are 231,294 square feet under construction at The Cove at Oyster Point and 126,493 square feet at the Alexandria Campus at 249 East Grand Avenue. In fact, over 1.5 million square feet of research and development biotech product is approved for construction over the next few years.

While South San Francisco is extremely active in this sector, the largest deals this quarter were actually South of Highway 92. Colliers International transacted the largest lease produced this quarter at 400 Saginaw Drive in Redwood City, leasing 60,841 square feet to Impossible Foods. Coming in right behind this deal was another Colliers International transaction with Auris Surgical Robotics who leased 54,602 square feet at 150 Shoreline Drive in Redwood City. Overall, we expect the research and development/biotech market to continue to stay hot for the next few years.

San Mateo County R&D Net Absorption vs. Gross Absorption


San Mateo County R&D Rent vs. Vacancy


San Mateo County R&D Gross Absorption by Size Range

16.04%

12.16%

23.64% 16.89%

16.75%

14.53% ≤ 3K SF

3-5K SF

5-10K SF

10-20K SF

20-50K SF

≥ 50K SF

Source: Hines.com

150 Shoreline Drive


2.25% 3.76%

9.41%

16.40%

40.54%

27.64% ≤ 3K SF

3-5K SF

5-10K SF

10-20K SF

20-50K SF

≥ 50K SF


Industrial > Average asking rates for industrial space continues to increase

> Virtually non-existent sublease space proves the market's strength

The San Mateo County industrial market continues to push new heights, but a lot of it is the same story. The market looks positive for landlords, but is not ideal if you are a tenant. Rents are up, vacancy is down, supply is limited and new product development is not economically feasible with the current conditions. With that in mind, businesses in this sector are thriving and the market is still very active.

The average asking rate for San Mateo County came in at a staggering $1.25 NNN at the end of this quarter. This is an 11.60 percent increase from last quarter’s rate of $1.12 NNN and a 30.20 percent increase from the end of 2015, which was at $0.96 NNN. This figure can be slightly skewed by a variety of factors including the total amount of vacancy and current product available; however, it cannot be ignored. Another notable measure is the 1.94 percent vacancy rate this quarter, which is down only 6 basis points from 2.00 percent last quarter, but a 53 basis points decrease from 2.47 percent at the end of 2015.

With vacancy rates down, we expected positive absorption for the industrial market. This quarter, we had 185,500 square feet of positive absorption bringing the year-end total to 1,723,820 square feet for 2016. A final statistical indicator of strength in this sector is a sublease market that is virtually non-existent. Six out of eight submarkets had no vacant sublease space with only Brisbane, Daly City, and South San Francisco putting up numbers. The year wrapped up with a total of only 100,509 square feet of sublease space on the market.

The most significant transaction this quarter was an institutional investment sale in South San Francisco. Colliers represented the buyer, Industrial Property Trust, and the seller, Mancini Properties, in the sale of a 48,000 square foot, multi-tenant, office/warehouse facility at 1404-1422 San Mateo Avenue. The largest new lease transaction was in Burlingame where LSG Sky Chefs leased 40,940 square feet at 25 Ingold Road. Overall, the San Francisco Peninsula industrial market had a very strong 2016 and we expect the same for the upcoming year.


1404-1422 San Mateo Avenue

San Mateo County Industrial Net Absorption vs. Gross Absorption


San Mateo County Industrial Rent vs. Vacancy


San Mateo County Industrial Gross Absorption by Size Range


16.04%

12.16%

23.64% 16.89%

16.75%

14.53% ≤ 3K SF

3-5K SF

5-10K SF

10-20K SF

20-50K SF

≥ 50K SF

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

0%

2%

4%

6%

8%

10%

12%

Q4 2007

Q4 2008

Q4 2009

Q4 2010

Q4 2011

Q4 2012

Q4 2013

Q4 2014

Q4 2015

Q4 2016

Total Vacancy Rate Asking Rents (NNN)

(800,000)

(600,000)

(400,000)

(200,000)

0

200,000

400,000

600,000

800,000

1,000,000

Q4 2007

Q4 2008

Q4 2009

Q4 2010

Q4 2011

Q4 2012

Q4 2013

Q4 2014

Q4 2015

Q4 2016


15.42%

9.99%

17.37%

28.05%

29.16% ≤ 3K SF 3-5K SF 5-10K SF 10-20K SF 20-50K SF ≥ 50K SF


LSG Sky Chefs25 Ingold Road

Burlingame

40,940 SF - Industrial

OpenText2950 S. Delaware Street

San Mateo

108,015 SF - Office

Achaogen1 Tower Place

South San Francisco

47,118 SF - Office

Significant Lease Activity

PROPERTY ADDRESS SIZE BUYER TYPE1301 Shoreway Road, Belmont 147,270 SF Westlake Realty Group Office

411 Borel Avenue, San Mateo 141,134 SF Ellis Partners, LLC Office

275 Middlefield Road, Menlo Park 126,000 SF Deutsche Asset Management Office

1720 El Camino Real, Burlingame 104,327 SF Ecrpa, LLC Office

1404-1422 San Mateo Avenue, South San Francisco 48,000 SF IPT Acquisitions, LLC Industrial

925-955 El Camino Real, South San Francisco 15,447 SF H. T. Gong Real Estate Investments, L. P. Office

2384 Bay Road, Redwood City 12,375 SF True & True, LLC. Industrial

Significant Sale Activity

Qualys919 E. Hillsdale Boulevard

Foster City

75,275 SF - Office

Auris Surgical Robotics150 Shoreline Drive

Redwood City

54.602 SF - R&D

Impossible Foods400 Saginaw Drive

Redwood City

60,841 SF - R&D

McKinsey & Company889 Winslow Street

Redwood City

37,814 SF - Office

SAN FRANCISCOBAY

BRISBANEDALYCITY

SOUTHSAN

FRANCISCO

SAN BRUNO/MILLBRAE

BURLINGAME

SANMATEO

BELMONT/SAN CARLOS

REDWOOD CITYMENLOPARK

REDWOODSHORES

FOSTERCITY


MARKET COMPARISONS

OFFICE MARKET

CLASS BLDGSTOTAL

INVENTORYSF

DIRECTVACANT

SF

DIRECTVACANCY

RATE

SUBLEASE VACANT

SF

SUBLEASE VACANCY

RATE

TOTALVACANT

SF

VACANCYRATE

CURRENT QUARTER

VACANCYRATEPRIOR

QUARTER

CURRENT OCCUPIED

SF

CURRENT NET ABSORPTION

SF

NET ABSORPTION

YTD SF

WEIGHTEDAVG ASKING

RENTALRATE (FS)

SOUTH PENINSULA*

MOUNTAIN VIEW/LOS ALTOS A 35 4,189,571 183,254 4.37% 28,780 0.69% 212,034 5.06% 7.67% 3,977,537 278,000 273,097 $7.54 B/C 144 2,722,428 116,240 4.27% 4,550 0.17% 120,790 4.44% 4.75% 2,601,638 5,682 (50,200) $5.62 Total 179 6,911,999 299,494 4.33% 33,330 0.48% 332,824 4.82% 6.49% 6,579,175 283,682 222,897 $6.80 PALO ALTO A 67 4,771,695 90,049 1.89% 9,118 0.19% 99,167 2.08% 2.17% 4,672,528 110,786 113,106 $7.40 B/C 187 5,566,345 118,311 2.13% 23,865 0.43% 142,176 2.55% 2.19% 5,424,169 (13,217) (4,330) $6.67 Total 254 10,338,040 208,360 2.02% 32,983 0.32% 241,343 2.33% 2.18% 10,096,697 97,569 108,776 $7.14

SAN MATEO COUNTY

MENLO PARK A 49 2,353,621 72,397 3.08% 0 0.00% 72,397 3.08% 3.05% 2,281,224 (558) 54,745 $8.56 B/C 133 3,705,142 225,616 6.09% 4,892 0.13% 230,508 6.22% 3.67% 3,474,634 (119,075) (167,908) $7.62 Total 182 6,058,763 298,013 4.92% 4,892 0.08% 302,905 5.00% 3.43% 5,755,858 (119,633) (113,163) $8.09 REDWOOD CITY A 30 2,977,865 23,220 0.78% 3,189 0.11% 26,409 0.89% 3.98% 2,951,456 (14,265) 155,464 $7.22 B/C 127 2,229,019 121,220 5.44% 2,200 0.10% 123,420 5.54% 4.43% 2,105,599 (30,797) 17,999 $5.13 Total 157 5,206,884 144,440 2.77% 5,389 0.10% 149,829 2.88% 4.17% 5,057,055 (45,062) 173,463 $6.67 BELMONT/SAN CARLOS A 11 896,150 0 0.00% 0 0.00% 0 0.00% 0.75% 896,150 6,708 17,553 $2.08 B/C 59 969,655 27,214 2.81% 0 0.00% 27,214 2.81% 2.44% 942,441 (5,771) 1,227 $4.03 Total 70 1,865,805 27,214 1.46% 0 0.00% 27,214 1.46% 1.63% 1,838,591 937 18,780 $2.54 REDWOOD SHORES A 49 5,409,910 322,181 5.96% 26,298 0.49% 348,479 6.44% 5.46% 5,061,431 (68,213) (14,170) $4.78 B/C 13 341,258 36,868 10.80% 0 0.00% 36,868 10.80% 10.16% 304,390 (5,922) (13,346) $4.54 Total 62 5,751,168 359,049 6.24% 26,298 0.46% 385,347 6.70% 5.72% 5,365,821 (74,135) (27,516) $4.77 SAN MATEO A 31 3,329,259 221,290 6.65% 24,522 0.74% 245,812 7.38% 5.51% 3,083,447 (73,187) (200,350) $5.21 B/C 169 4,802,135 422,104 8.79% 154,756 3.22% 576,860 12.01% 9.35% 4,225,275 (154,054) (339,007) $4.20 Total 200 8,131,394 643,394 7.91% 179,278 2.20% 822,672 10.12% 7.78% 7,308,722 (227,241) (539,357) $4.70 FOSTER CITY A 14 2,743,334 190,267 6.94% 0 0.00% 190,267 6.94% 9.75% 2,553,067 20,621 52,876 $5.27 B/C 31 660,502 41,611 6.30% 0 0.00% 41,611 6.30% 4.07% 618,891 (14,447) 56,705 $4.46 Total 45 3,403,836 231,878 6.81% 0 0.00% 231,878 6.81% 8.58% 3,171,958 6,174 109,581 $5.08 BURLINGAME A 8 795,912 90,583 11.38% 32,833 4.13% 123,416 15.51% 16.30% 672,496 6,329 (33,732) $3.87 B/C 82 2,064,175 52,949 2.57% 4,400 0.21% 57,349 2.78% 1.62% 2,006,826 (25,602) 16,620 $4.12 Total 90 2,860,087 143,532 5.02% 37,233 1.30% 180,765 6.32% 5.74% 2,679,322 (19,273) (17,112) $3.92 SAN BRUNO/MILLBRAE A 9 1,159,195 0 0.00% 5,000 0.43% 5,000 0.43% 0.43% 1,154,195 0 (11,978) $3.39 B/C 33 655,408 7,637 1.17% 27,427 4.18% 35,064 5.35% 4.69% 620,344 (3,881) 12,833 $2.38 Total 42 1,814,603 7,637 0.42% 32,427 1.79% 40,064 2.21% 1.98% 1,774,539 (3,881) 855 $2.93 DALY CITY A 3 505,988 96,623 19.10% 0 0.00% 96,623 19.10% 18.69% 409,365 (2,969) (85,636) $3.97 B/C 29 430,123 40,834 9.49% 810 0.19% 41,644 9.68% 8.25% 388,479 (4,233) (11,311) $2.79 Total 32 936,111 137,457 14.68% 810 0.09% 138,267 14.77% 13.73% 797,844 (7,202) (96,947) $3.69 SOUTH SAN FRANCISCO A 18 3,205,526 326,066 10.17% 0 0.00% 326,066 10.17% 15.27% 2,879,460 149,900 (77,773) $4.32 B/C 52 1,189,759 38,330 3.22% 28,127 2.36% 66,457 5.59% 3.59% 1,123,302 (26,339) (13,330) $4.12 Total 70 4,395,285 364,396 8.29% 28,127 0.64% 392,523 8.93% 12.12% 4,002,762 123,561 (91,103) $4.29 BRISBANE A 5 667,067 186,591 27.97% 11,665 1.75% 198,256 29.72% 30.68% 468,811 (44,717) 88,706 $3.93 B/C 6 131,534 3,658 2.78% 0 0.00% 3,658 2.78% 10.70% 127,876 10,420 (42,014) $2.85 Total 11 798,601 190,249 23.82% 11,665 1.46% 201,914 25.28% 27.39% 596,687 (34,297) 46,692 $3.91

SAN MATEO COUNTY MARKET TOTAL

A 227 24,043,827 1,529,218 6.36% 103,507 0.43% 1,632,725 6.79% 7.77% 22,411,102 (20,351) (54,295) $5.30 B/C 734 17,178,710 1,018,041 5.93% 222,612 1.30% 1,240,653 7.22% 5.38% 15,938,057 (379,701) (481,532) $4.97 Total 961 41,222,537 2,547,259 6.18% 326,119 0.79% 2,873,378 6.97% 6.77% 38,349,159 (400,052) (535,827) $5.20

QUARTERLY COMPARISON AND TOTALS Q4-16 961 41,222,537 2,547,259 6.18% 326,119 0.79% 2,873,378 6.97% 6.77% 38,349,159 (400,052) (535,827) $5.20 Q3-16 952 41,066,027 2,585,064 6.29% 195,026 0.47% 2,780,090 6.77% 6.80% 38,285,937 (715,751) (135,775) $5.13 Q2-16 951 41,028,783 2,523,715 6.15% 265,754 0.65% 2,789,469 6.80% 7.07% 38,239,314 51,091 579,976 $5.01 Q1-16 949 40,983,768 2,674,354 6.53% 221,478 0.54% 2,895,832 7.07% 7.82% 38,087,936 528,885 528,885 $4.70 Q4-15 947 40,711,033 2,912,037 7.15% 271,748 0.67% 3,183,785 7.82% 7.72% 37,527,248 246,214 613,999 $4.52

*THE SOUTH PENINSULA CITIES OF MOUNTAIN VIEW, LOS ALTOS, AND PALO ALTO ARE FOR REFERENCE PURPOSES AS THEY ARE NOT INCLUDED IN THE SAN MATEO COUNTY MARKET TOTALS.


MARKET COMPARISONS

R&D MARKET

BLDGSTOTAL

INVENTORYSF

DIRECTVACANT

SF

DIRECTVACANCY

RATE

SUBLEASE VACANT

SF

SUBLEASE VACANCY

RATE

TOTALVACANT

SF

VACANCYRATE

CURRENT QUARTER

VACANCY RATEPRIOR

QUARTER

CURRENT OCCUPIED

SF

CURRENT NET ABSORPTION

SF

NET ABSORPTION

YTD SF

WEIGHTEDAVG ASKING

RENTALRATE (NNN)

SOUTH PENINSULA*

MOUNTAIN VIEW

271 13,914,511 179,859 1.29% 134,113 0.96% 313,972 2.26% 2.16% 13,600,539 (18,402) (27,777) $3.78

PALO ALTO

59 13,653,874 29,476 0.22% 42,366 0.31% 71,842 0.53% 0.43% 13,582,032 (13,343) 11,834 $4.92

SAN MATEO COUNTY

MENLO PARK

73 4,060,030 129,404 3.19% 0 0.00% 129,404 3.19% 2.68% 3,930,626 (21,047) (51,987) $3.33

REDWOOD CITY/REDWOOD SHORES

74 2,480,441 52,937 2.13% 12,600 0.51% 65,537 2.64% 3.28% 2,414,904 16,261 (38,998) $3.53

BELMONT/SAN CARLOS

48 1,616,547 38,399 2.38% 10,500 0.65% 48,899 3.02% 2.37% 1,567,648 (9,445) (42,701) $2.41

SAN MATEO/FOSTER CITY

61 1,585,620 20,000 1.26% 0 0.00% 20,000 1.26% 8.54% 1,565,620 126,159 106,159 $2.55

SAN BRUNO/MILLBRAE/BURLINGAME

41 837,476 23,268 2.78% 0 0.00% 23,268 2.78% 3.39% 814,208 3,439 (10,898) $1.64

SOUTH SAN FRANCISCO/BRISBANE

103 6,814,495 54,508 0.80% 0 0.00% 54,508 0.80% 0.72% 6,759,987 (6,649) 21,204 $2.75


Total 400 17,394,609 318,516 1.83% 23,100 0.13% 341,616 1.96% 2.60% 17,052,993 108,718 (17,221) $3.11

QUARTERLY COMPARISON AND TOTALS Q4-16 400 17,394,609 318,516 1.83% 23,100 0.13% 341,616 1.96% 2.60% 17,052,993 108,718 (17,221) $3.11

Q3-16 400 17,385,628 446,232 2.57% 5,362 0.03% 451,594 2.60% 1.96% 16,934,034 (114,228) (125,939) $2.90

Q2-16 400 17,367,843 320,987 1.85% 18,879 0.11% 339,866 1.96% 1.64% 17,027,977 (125,879) (11,711) $2.77

Q1-16 399 17,359,043 236,652 1.36% 47,828 0.28% 284,480 1.64% 2.38% 17,074,563 114,168 114,168 $2.71

Q4-15 403 17,447,838 276,264 1.58% 138,721 0.80% 414,985 2.38% 3.16% 17,032,853 136,815 468,285 $2.93

INDUSTRIAL MARKET

SOUTH PENINSULA*

MOUNTAIN VIEW

145 1,711,798 47,755 2.79% 0 0.00% 47,755 2.79% 3.06% 1,664,043 4,134 (25,904) $2.14

SAN MATEO COUNTY

MENLO PARK

83 2,648,880 40,380 1.52% 0 0.00% 40,380 1.52% 0.94% 2,608,500 (15,480) (40,380) $1.80

REDWOOD CITY

184 4,154,108 18,730 0.45% 0 0.00% 18,730 0.45% 0.19% 4,135,378 (10,916) (21,718) $1.46

BELMONT/SAN CARLOS

234 6,157,960 82,185 1.33% 0 0.00% 82,185 1.33% 1.52% 6,075,775 1,361 47,736 $1.80

SAN MATEO/FOSTER CITY

76 1,393,074 43,539 3.13% 0 0.00% 43,539 3.13% 4.30% 1,349,535 16,300 (10,410) $1.45

BURLINGAME

138 3,988,007 71,570 1.79% 0 0.00% 71,570 1.79% 1.74% 3,916,437 (3,960) (69,298) $1.61

SAN BRUNO/MILLBRAE

20 668,449 40,477 6.06% 0 0.00% 40,477 6.06% 3.25% 627,972 (18,786) (40,477) $1.32

BRISBANE/DALY CITY

103 5,253,085 0 0.00% 28,170 0.54% 28,170 0.54% 2.03% 5,224,915 78,725 244,268 $1.05

SOUTH SAN FRANCISCO

392 15,281,737 369,252 2.42% 72,339 0.47% 441,591 2.89% 2.68% 14,840,146 (40,328) (251,389) $1.05


Total 1,230 39,545,300 666,133 1.68% 100,509 0.25% 766,642 1.94% 2.00% 38,778,658 6,916 (141,668) $1.25

QUARTERLY COMPARISON AND TOTALS Q4-16 1,230 39,545,300 666,133 1.68% 100,509 0.25% 766,642 1.94% 2.00% 38,778,658 6,916 (141,668) $1.25 Q3-16 1,232 39,527,298 644,192 1.63% 148,130 0.37% 792,322 2.00% 1.27% 38,734,976 (421,566) (148,584) $1.12 Q2-16 1,237 39,505,720 470,918 1.19% 32,718 0.08% 503,636 1.27% 2.81% 39,002,084 417,860 272,982 $1.05

Q1-16 1,237 39,500,680 1,081,611 2.74% 27,918 0.07% 1,109,529 2.81% 2.47% 38,391,151 (144,878) (144,878) $1.02

Q4-15 1,234 39,414,956 944,872 2.40% 29,262 0.07% 974,134 2.47% 3.08% 38,440,822 239,878 334,660 $0.96

*THE SOUTH PENINSULA CITIES OF MOUNTAIN VIEW, LOS ALTOS, AND PALO ALTO ARE FOR REFERENCE PURPOSES AS THEY ARE NOT INCLUDED IN THE SAN MATEO COUNTY MARKET TOTALS.

COLLIERS INTERNATIONAL | REDWOOD CITY203 Redwood Shores Parkway, Suite 125Redwood City, CA 94065 | USA+1 650 486 2200colliers.com/redwoodcity

MARKET CONTACTS:Rick KnaufExecutive Managing DirectorCA License No. 00823386+1 650 486 [email protected]

Ava Jensen Research Analyst+1 650 486 [email protected]

AngeLin Vo | Senior Graphic Designer

CONTRIBUTING AUTHORS:Mike Cobb | Senior Vice PresidentMike Davis | Senior Vice President

554 offices in 66 countries on 6 continentsUnited States: 153 Canada: 34 Latin America: 24 Asia Pacific: 231 EMEA: 112

$2.5billion in annual revenue*

2.0billion square feet under management

16,000professionals and staff

*All statistics are for 2015 and include affiliates

Copyright © 2017 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

About Colliers InternationalColliers International Group Inc. (NASDAQ and TSX: CIGI) is an industry leading global real estate services company with more than 16,000 skilled professionals operating in 66 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.

Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals’ Global Outsourcing for 11 consecutive years, more than any other real estate services firm.

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